Nitrogen Prices: How Are They Impacting CF Industries?
Last week, Moody’s downgraded CF Industries’ (CF) credit rating to Baa3 from Baa2. It cited that “Moody’s expects CF’s credit metrics to weaken as a result of lower prices and increasing market volatility as new nitrogen capacity is starting up in North America.” Ammonia is the fundamental nitrogen fertilizer. It’s used to upgrade to other nitrogen as well as phosphorus fertilizers.
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For the week ending October 14, ammonia prices at the above locations in North America (MXI) traded sideways. Average weekly prices in the Corn Belt region of the US stood at $367 per metric ton, while prices in the Southern Belt region stood at $308 per metric ton.
Prices in Tampa Bay stood at $210 per metric ton, while prices in the US Gulf NOLA (New Orleans) stood at $215 per metric ton. Keep in mind that the US will require about 30% of its nitrogen requirement from imports in 2017. The rest of the requirements will be provided by companies like Terra Nitrogen (TNH), CF Industries, CVR Partners (UAN), and PotashCorp (POT).
The average prices at the above four locations in North America fell 41%—compared to the same week in 2015.
Outside North America
Prices outside North America also traded sideways. Ammonia prices in the Black Sea traded at $165 per metric ton. In the Middle East, average weekly ammonia prices stood at $165 per metric ton. In Western Europe, average weekly ammonia prices stood at $225 per metric ton.
Compared to the average weekly prices in the same quarter last year, ammonia prices at the above four locations fell 58%.
Most of the ammonia is upgraded to urea. We’ll discuss urea in the next part.